When 7's Are 9's

September 18, 2020

September became the 9th month as a result of political action.


When 7's are 9's

This one is going to be less stream of consciousness than the last one, and a little less blog-gy, but just as metaphor laden, with a smattering of anecdotal street story to hammer the point home.

September the 9th month has 7 at it's root. Septem. September became the 9th month as a result of political action, in essence. I am pretty sure this isn't gonna get political, but it is a caveat emptor with regards to how you can let numbers misinform your priorities, and by extension your timing.

Many properties are now hovering around their 2013-2015 contract price. For the sake of my illustrative purposes, let's call that 7 years. Now a property that isn't a 10, call it a 9, represents value, opportunity, and future profit, unless there is no COVID vaccine, no NYC bounceback, no dining, no working in offices, and no substantive change from the Presidential Office and Congress.

A long list of unlikely caveats, preventing you from potentially taking action and placing a bet on the future appreciation of property that can be bought at "throwback" prices. Also, the hopeful pessimist opining that persistent chaos will bring further discounts AND limited competition, is probably not the person you want to listen to when making plans about your future.

So the question is: Will you wait for the perfect property, a 10, and end up with 0 (nada). Or will you see that a property at the lowest price in 5-7 years is available with likely 5-7% negotiability, is as much of a 9 that you will find, and at least begin looking in earnest?

I started writing this thinking it would be about how numbers can be used to mislead, and how the media serves more as a petri dish for advertisers than a disseminator of accurately contextualized data, and I just got upset. So outside of the numerical metaphor above, what you will find below, instead, will be a smattering of experiential knowledge gleaned from working buyers and renters during the last month.


Stubbornly overpriced listings are coming down in price, but there is still some bloat out there. Still not 15-20% off original list price, but hearkening back to a less dizzying digit. A bid asking more than 5% reduction could cause you to miss out on a deal, so best to not be overly aggressive. In many cases, pricing is approaching 5-7 year lows, so that is substantial...

Also a great marker of current reality for those who secretly want to buy a brownstone for $500k. Current pricing won't get back to the 1990's, but in many cases it is hovering around 2013, and that is cheaper than it's been in 7 years.

Oh yeah and New York is not Dead. Nor is it any where near what it was in the 70's,80's, and even 90's. In terms of Real Estate Prices or Crime Rates. Population

Here's another number.

If the "Wealthiest New Yorkers" who "fled" NYC represent a strong subset of the top 5% by income, then the 420,000 or so reported emigres would represent 5% of NYC's roughly 8.4M residents. Let's continue. Considering to qualify for top 5% household income range is from $250-480k as of 2019.

You can calibrate your filter for the future of NYC as a function of what 95% work as 1.

Everybody should have seen the Seinfeld Article stating that New York is not dying. If not, here it is.

To summarize, he states that New York is not dead because it's based on the energy of innovation, and that real New Yorkers are resilient.

To be clear, being resilient is not the same as being super human. I have seen some shifting, hustling, and reconfiguring that has impressed me and given me hope for the future of the city. I have also seen signs that many are not able to adjust so swiftly, while dealing with stress, grief, and mounting bills. 

Again, please forgive any perceived financial insensitivity in the following discussion of real estate transactions during these tough times.

Optimistically, the price corrections and new rent regulations are keeping speculators frothing at the bit for steeply discounted multifamily property, leaving a lot of perfectly suitable homes available for end users who may not be paying all cash. This is good.

Massive retail vacancy and default, will likely lead to a correction of commercial rents in the city. Some new concept will need to take over, because indoor flea markets, banks, and duane reades do not a city make. Talented restaurateurs, chefs, and spirit salesmen, will likely find cheaper rent in Brooklyn and Queens, which may make the "outer boroughs" even cooler. This is the silver lining. That and the demise of the $15 lunch salad. 

New Yorkers fleeing the city struggle with 'survivor's guilt'
(This is from my original mad about numbers diatribe.)

Some of you may be reading how "everybody" is fleeing NYC, and how suburbs are overwhelmed with the onslaught of dealmaking downstaters. Whelp. 440-500,000 people to an overcrowded city of 8.6M is not "everybody."  

There are many people who will stay, because NYC is all they know, is the place they fought to get to, and or the place where they became/found/recreated themselves. People leave a lot of places to come here, not everybody is ready, willing, or able to uproot so easily. So, yeah, there's that. There's plenty of NYC and NY'ers left. There is also plenty of undeniably overpriced product on the market, but unless you are in the 2m+ market, you likely won't see it.

"New Yorkers Are Fleeing to the Suburbs: ‘The Demand Is Insane’"
PS: Towns with populations in the 10s of thousands, likely don't have hundreds of sales per year, so an increase of a hundred New Yorkers per tri-state hamlet is going to have a profound effect on their markets. 

If you want to leave NYC, I can refer you to a broker anywhere real estate is sold in the US, and beyond. For many, not most or all, COVID has simply accelerated a pre-existing plan of fleeing 900sf 2 -3 bedrooms for 2-3 story houses, and I'm not mad at that. At all. Everybody needs to do what they deem is best for their personal growth, safety, and health. I simply take issue with the conflation of a subset of the market with the entirety of a city that has persevered through many trials and will likely reemerge from this Covid Chrysalis anew. Hopefully with a bit more cafe culture and less traffic. 4 day work week?

More below,
NEW LISTING: 230 Ashland Place 6B
FOR SALE: $792,000 720SF 1 BED 1 BATH

This luxury 1 bed condo in the heart of Brooklyn features an open floorplan that maximizes living space and capitalizes on an expansive skyline view of Fort Greene and beyond. Facing East, the flow of this home welcomes you in from the front door like a familiar friend inviting you to sit down and relax. The Forte is Pet Friendly, has a full time doorman, a gym, and a furnished roof deck featuring amazing views that are at once private and enviable. 
So i've been touring 2 fams in Bed Stuy with a buyer for the past 45 days or so. While we've seen less than 10 houses in person, we have filtered over 50 to get to the point where the buyer has crystallized their understanding of non-negotiable priorities and the relative cost of properties as distinguished by layout, location, and finish.

My summary of BedStuy/PLG/Bushwick/CrownHeights/Flatbush is that you have a stratification of demand for each location and slightly different product inventory in each location.

You can find modern renovated 2 fams in Bushwick for under 1.5M. Turnkey.
These are just a handful of renovated images from live listings. No links to click. 
Unless you want to email me to start looking, lol. 
Years ago, everybody was saying Bushwick was "the next big thing." 
There are currently 74 houses listed under 1.5M, Come get you some!

147 Cornelia Street, Brooklyn, NY, 11221 81a Menahan Street, Brooklyn, NY, 11221 630 Chauncey Street, Brooklyn, NY, 11207 194 Cooper Street, Brooklyn, NY, 11207

In Bed Stuy, the range is 1.5-2.75M for 2 fams, the former being small, in need of renovation and on a less than prime block, and the latter being superlative finish, location, and layout.  You can get everything from fixer upper with original details to investor castrated white boxes perfect for rental/investment, to the perfect blend of old and new on a tree lined block. Really depends on what you are looking for, and the more toppings you want the more expensive the pizza.

185a Vernon Avenue, Brooklyn, NY, 11206 404 Chauncey Street, Brooklyn, NY, 11233
840 Hancock Street, Brooklyn, NY, 11233 809 Halsey Street, Brooklyn, NY, 11233

Between 1.7M and 2.75, the pricing is a bit subjective, you may have overly ornate finishes, or end up trying to figure out if you want a upper duplex, a ground/basement duplex, an owner's triplex, or a ground/parlor duplex. You may need to build a deck, renovate some bathrooms, change the backsplash in the kitchen, etc.

Bottom line: there are many details that affect the valuation and utility of a property. As a buyer, it is best to take the time to identify the features that mean the most to you, whether that is an open floorplan, a double sink in a true master bathroom, or a garden rental that can phase into an in-law suite or be reabsorbed in the future as your family grows.

This can be done at home/online by comparing floorplans, but a quick Sunday Open House bop about, by appointment, can do wonders from taking your search from virtual to real in leaps and bounds.

MSG me if interested in knowing the distinction between neighborhoods and property types. Happy to personalize my findings for your search parameters and priorities.

LOCKBOXES: I've seen several houses via lockbox, while this is a function of efficiency for the listing broker, none of these houses ultimately captivated my customer, or my attention. So if it's a 1.5M property where the broker doesn't even show up, chances are you might be underwhelmed.

FSBO'S: Owners that believe they can successfully manage the sales process alone, without a broker, tend to be opinionated, stubborn, out of sync with the market, and likely emotionally invested in the upgrades they made to their home. While it is possible to find a reasonable property For Sale By Owner, it is likely either overpriced, or so attractive that you can imagine more competition than a timed open bar.
This is going to be a shorter section, simply because rentals move quickly, and the average renter thinks they have access to the entire market at their fingertips and don't need a broker, even if the fee is being paid by management. 

Below you have a listing I have for rent. Was $3100 2 years ago, now after concessions, net effective rent is $2500 and NO FEE. Bedford and Lexington.

1063 Bedford Avenue, Brooklyn, NY, 11216

Rents have definitely rolled back. The glut of luxury product has doorman elevator buildings choking on inventory, offering months free, paying the fee etc.

When it comes to non-doorman property, (see above example) you may still find some trickle down concessions as these units go head to head against luxury units which are beginning to encroach upon their price point territory.

Get your paperwork together before you start looking. Employment/CPA Letter, past 2 tax returns, and be prepared to print two cycles of your bank statement. 

Spend time learning what is important to you, as with anything, and then watch your specific market while extending your boundaries by one local train stop. Search $200 or 10% above your max price point. There is no guarantee that you can get such a hefty reduction, but you might as well try.
I have an investor client looking around 500k. We focused on condo, because like most buyers, the horror stories of coops being inflexible, etc, made the investor skittish. Well, I originally advised that we look for coops with unlimited subletting rules. Coops generally retain value and are more stable than Condos. They are more centrally located, as many are built pre 1980, whereas a new development condo is generally in a "new locale" aka the cheapest attractive land the developer could find.

The thing with condos is that for so long they have been speculative investments that have appreciated nicely. There wasn't a glut of rental competition, resale competition, and tax abatements were in full force. This is no longer the case. Some condos are in prime locations, or have amenity packages and architectural design that speaks to a modern buyer, who intends to occupy for 7-10 years or more. Those are wins. Like my listing in Fort Greene, for example. 

Comparing 50th street and 1st ave to 13th and 6th ave is something of a no-brainer. You just need to pay attention to flip taxes, carrying costs, and sublet policies.

If you are looking to occupy, please understand that all coops aren't on 5th ave or Central Park West, not all will have CRAZY criteria, you will most likely need to put a minimum of 20-25% down, you will in most cases have sublet restrictions, but the sticker price will be cheaper than a comparable condo, and it will appreciate over your longer hold, because, well, in most cases, you won't be able to sublet without limit. But that doesn't really matter so much if you intend to live there, does it?

Subset of coops are HDFC coops, which can be super affordable, but with more restrictions. Pls reach out for more details.
I've been saying this a lot, so hopefully you hear me. There are tons of properties to be had. They are less expensive than they were prior. That almost never happens. They are still going to have nooks and crannies, and in some cases, shafted interior views, but they will go up in value. I guarantee that.

What you need to pay attention to, rather than whatever numbers are being tossed about without context in the news, is how that specific subset of the market is performing in terms of days on market, reductions, and number of listings entering contract in a given period of time. Then compare that to similar product a $10 uber ride away, 

You can win pin the tail on the donkey by peeking, but only if you peek first. 

New to market.
Vaulted ceilings crown the Great Room on 2nd floor
Living area with fireplace and half bath.
Downstairs, 3 bedrooms with 2 full baths.
Garage plus additional driveway parking.
Two second floor decks off Great Room.
Large deck in rear of home, perfect for bbq
Overlooking Heated pool

Less than mile to Long Beach at Noyac Bay and minutes to Village of Sag Harbor.
Msg me about this one, it's not my listing, so I can't link it.
I didn't watch this one, so i'm going to boldly wager that there is some corroboration of what i've said above.

Join panelists Jonathan Miller (Founder & President of Miller Samuel) and Noah Rosenblatt (Founder & CEO of UrbanDigs) as they talk through the current market. The questions asked came from a survey of agents, so there's bound to be immediate takeaways and items of interest for everyone.
Miller Samuel, Inc (a treasure trove of data!): https://www.millersamuel.com/
Track the New York City real estate market with real-time data and charts: https://www.urbandigs.com/
Link to our overview of Manhattan or Brooklyn real estate stats: https://www.urbandigs.com/marketwide-...
For more Manhattan and Brooklyn real estate conversations: http://www.talkingmanhattan.com/
Sign up to get UrbanDigs insights delivered to your inbox each week: https://tinyurl.com/TalkingManhattan
While I have stuck to the once a month format for the Brighter Report, we have been having bi-weekly office sales meetings to understand both the shifting terrain and orient ourselves of the best way to make productive use of lockdown and mirror some of the social changes espoused by the recent protests.

Trust me. Only Real Estate.  
Both sales meetings presented data echoing the sentiments contained in the May Brighter Report.

BRIGHTER: Do not expect 15-20% discounts, they are more likely to be 5-7% price corrections.


MACK: “If you had to answer, the Covid discount to date has only proven to be 4 percent,” Mack said, offering ballpark figures. “It’s far from the 20-something that some people expect when they walk in.” said Kelly Kennedy Mack, CEO of Corcoran Sunshine Marketing Group (responsible for roughly 1/3 of new development condo marketing)

Most of Q4 2019 and Q1 2020 was spent advising people that it was a buyer's market. That waiting for the bottom would lead to missing the bottom and entering the market in a period of increased competition.

Post Covid, we have constrained supply and pent up demand, to the extent that it is a seller's market in pockets. Those who were waiting for the bottom, who are now waiting for 10-20% discounts will likely be twiddling their thumbs for a while. 

Being aggressive and opportunistic with respect to maximizing your discount, will definitely put you in a preferential position than those offering 10-20% under ask with no rationale. Being serious about your offer will get you the deal, those who overreach will be overlooked, as there are multiple qualified buyers for most properties.

In conducting research for several active buyers, I have found that their shortlisted properties quickly transition from available to "in contract" or "contract out." 

The early bird buyer is getting the worm, and the "stingy" seller who wants to wait for more clarity before listing, so as to maximize their price, will likely end up listing after a second wave lockdown, or in the inferior November to March Winter Sale Season. 

Sellers don't let that be you.

Sellers with properties currently on market are motivated dealmakers, and their properties are moving. Buyers, if you have the capital, have job security, and have a desire to stay in NYC, it's your time to make a move.

And if you want to leave the city, let me know, and I will refer you to a specialist in your target market nationwide.
How can I help you?
Buyers: 150k-15M. 
Sellers: 500k-5M. 
Renters: 1800-18k per month.  

Areas Served. 
All Manhattan.
All Brooklyn: accessible by train, 1 fare zones.
Queens: LIC/Astoria, Forest Hills, Jackson Heights
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